UK digital entertainment booms

3 January 2014

LONDON: Digital services, including video and music streaming as well as games downloads, were among the fastest growing categories in the UK entertainment retailing sector in 2013, according to preliminary end-year figures.

The Entertainment Retailers Association (ERA) highlighted digital video, which includes iTunes downloads and streaming services like Netflix, Lovefilm and Blinkbox, which it said had grown 40.2% to reach £621.4m.

Music streaming, which takes in the likes of Spotify, Deezer, O2 Tracks and bloom.fm, was up 33.7% to £103m, while digital games, which covers mobile gaming as well as PC and console downloads, increased 16.4% to £1.18bn.

The digital market was growing significantly quicker than the overall UK music, video and games market which rose a more modest 4% to reach £5.4bn. Games were the biggest sector, accounting for 41.4% of the total, followed by video on 38.9% and music on 19.7%.

While digital sales were racing ahead, physical sales were declining, although they still accounted for the greater part of the video and music categories.

Physical sales of video were down 6.8% to £1.44bn, while those of music dropped 7.6% to £542.7m; games slipped back 2.9% to £1.055.5m. The best-performing physical formats were Blu-ray video up 10% to £251.8m and vinyl albums whose sales more than doubled (up 101%) to £14.6m.

Kim Bayley, ERA Director General, hailed the figures as "a stunning result after at least five years of decline". She noted that new technologies had historically presented challenges to the entertainment business, "but these results show how our members are helping music, video and games companies find new markets," she declared.

"The big picture growth story in entertainment is clearly digital," she said, "but the success of Blu-ray and – most astonishingly vinyl – demonstrates that physical formats can still flourish when they are able to offer something distinctive."

Bayley thought that video had done well to maintain its physical presence while enjoying strong digital growth. "The challenge for video companies in 2014 will be to establish attractive physical formats which offer digital copies which enable them to hang on to valuable store space," she suggested.